Divorce Court Lacked Jurisdiction to Transfer Property, Title Company Loses

Dec. 4, 2012 – Gustavo Montalvo returned to Wisconsin after several years to learn that his wife divorced him and sold the house they owned. He wasn’t aware of these events, and he never signed the real estate documents allowing transfer of the house.

In 2008, a jury found that U.S. Title and Closing Services LLC engaged in a conspiracy to divest Montalvo of his property interest through a forged signature on a quit claim deed. The circuit court ordered actual and punitive damages and denied a post-verdict motion. U.S. Title appealed.

The title company argued that Montalvo’s lawsuit should have been dismissed at the summary judgment stage, because the divorce court actually transferred Montalvo’s interest in the house during divorce proceedings; he had no interest in the real property eventually sold.

The divorce court judge had recognized a lack of authority to transfer real estate in default divorce proceedings. But the final judgment awarded the real estate to Montalvo’s wife.

Montalvo successfully moved to modify the divorce judgment, arguing that he was never personally served and therefore the divorce court lacked in rem jurisdiction over his property interests. Montalvo had been living out of state and his wife served him by publication only.

The divorce court ordered Montalvo’s wife to split the home sale proceeds. Montalvo then instituted his lawsuit against U.S. Title, alleging conspiracy. He won after a jury trial.

In Montalvo v. U.S. Title and Closing Services LLC, 2012AP102 (Dec. 4, 2012), the District I Wisconsin Court of Appeals affirmed the lower court judgment. A three-judge panel ruled that “the divorce court lacked the appropriate jurisdiction to transfer Montalvo’s interests in the subject property because Montalvo was not personally served in the divorce action.”

Thus, the circuit court properly refused U.S. Title’s motions for summary judgment and judgment notwithstanding the verdict, the panel explained.

“We feel obligated to comment on [U.S. Title’s] argument that the divorce judgment itself divested Montalvo of his interest in the property,” wrote Judge Joan Kessler, noting that U.S. Title documents indicated Montalvo was a co-owner of the house. “We consider the argument disingenuous at best in view of [U.S. Title’s] documents in the record.”